KAI to Appoint New CEO This Week... Another Parachute Appointment Controversy [Yang Nakkyu's Defence Club]

Kim Jongchul to Be Appointed as New CEO at Shareholders' Meeting on March 18

Endless Controversy Over Qualifications and Connections to Commissioner Lee Yongcheol's DAPA Group

The appointment of the new president of Korea Aerospace Industries (hereafter KAI) will be finalized on March 18, but controversy continues to surround the process. Even before his official inauguration, newly appointed president Kim Jongchul, who was named by the board of directors last month, has been engaging in public activities, such as creating and distributing invitations bearing his name.

According to the industry on March 15, Kim Jongchul, the new president, has distributed invitations in his own name. The invitations are for the rollout ceremony of the first mass-produced KF-21 Boramae aircraft, which will be held on March 25 at KAI’s headquarters in Sacheon, Gyeongnam. The KAI labor union believes that if President Lee Jaemyung attends this event, it could provide an opportunity for both the newly appointed president Kim Jongchul and Defense Acquisition Program Administration (DAPA) Commissioner Lee Yongchul’s circle to make a strong impression together.

The Sacheon Citizens’ Solidarity also assesses that the appointment of the new KAI president is an example of personnel appointments from the Lee Yongchul DAPA network. The group raised suspicions that Commissioner Lee Yongchul was deeply involved in the personnel decisions for KAI’s president, outside directors, and audit committee chair. In its national petition, the group argued, “It is a distorted governance structure where the referee (DAPA) in defense procurement forms a team with the player (KAI).”

According to the national petition, the KAI board of directors held its meeting on February 27 in the “changing room/waiting area” of the Seoul office, rather than the official meeting room. During the process, the meeting proceeded without a gavel. A gathering called by the Export-Import Bank of Korea led to a 30-minute tea meeting with the candidate, which was subsequently portrayed as “time for verification and evaluation.”

After the board meeting ended, new directors were placed throughout the board. Kim Kyungja (former Deputy President of the Export-Import Bank of Korea) and Kim Geuntae (former Commander of the First Army, retired general), who previously held seats assigned to the Export-Import Bank, were removed from the board. Their positions were filled by Hong Sunyoung, a former head of the Economic Cooperation Business Division at the Export-Import Bank of Korea, who holds a master’s degree in law from Yonsei University, and attorney Lee Taeyoung (from law firm Jiphyeonjeon), who is also a Yonsei University law alumnus and worked for eight years in the DAPA legal office alongside Commissioner Lee Yongchul. Attorney Lee is now not only an outside director but also serves as chair of the audit committee, effectively consolidating KAI’s internal control and audit functions. In addition, the last executive director slot, per KAI’s articles of incorporation which allow for a two-person system, was assigned to Song Hocheol, Executive Vice President for Production and Procurement, who is both a junior alumnus of Ulsan Hakseong High School with the president-designate Kim Jongchul and a top member of the “Choi Jongwon line.”

There are growing observations that key positions inside and outside KAI are being connected through the “Lee Yongchul line,” led by Commissioner Lee Yongchul, who has brought in former DAPA founding member Kim Jongchul, internal executives like Choi Jongwon and Song Hocheol, as well as Yonsei University law alumni and DAPA connections such as outside director Hong Sunyoung and audit committee chair Lee Taeyoung. In response, DAPA has refuted the claims, stating, “They are simply alumni of the commissioner, not personally close to him.”

The KAI labor union’s opposition is also strong. They criticize the new president Kim Jongchul for his “lack of ability.” After retiring as an Air Force lieutenant colonel, Kim was recruited to DAPA as a Level 4 (director), but his highest promotion was only to department director (head of the Unmanned Systems Division), and he did not reach the rank of division director. After resigning in 2019, he even failed to secure the position of Head of the Defense Industry Division at Gyeongnam Technopark, being evaluated as “having mainly administrative experience in acquisition and procurement, but lacking industry and policy capability.” The union argues, “It is unreasonable to appoint someone, who was deemed unfit even for a provincial defense industry head position, as president of the much more critical national flagship aerospace company KAI.”

A KAI labor union official stated, “It is inappropriate for Kim Jongchul, the new president, to receive work briefings and take action even before he is officially appointed as president at the general shareholders’ meeting,” adding, “It can only be seen as internal power alignment already taking place.”

This content was produced with the assistance of AI translation services.